For family businesses, succession plans are central to survival. Outsiders may suppose that such things are straightforward, but there is a surprising amount of nuance when it comes to succession. Personal and emotional factors can warp the plan in strange ways if you're not careful, or geopolitical trends may affect family businesses differently.

KPMG carries out an annual study of the factors that most influence succession plans in family businesses, and this year the main themes surround tax and timing, in a context of changing generational norms and economic uncertainties.

The five main takeaways are:

  1. For family businesses in the US, the recent national tax reforms have hugely improved the tax reliefs available to family business transfers.
  2. As the UK and the EU continue to carve out Britain's exit plan, implications for family businesses in the UK remain unknown.
  3. In many countries, shadow economies are widespread, meaning that many businesses—family-run ones included—operate outside of formal business structures. There is a worldwide push for such informal enterprises to enter the legal economy.
  4. Increasing lifespans could disrupt business succession plans, as owners now want to stay active for longer—plus, it means more family members living off the firm's assets.
  5. New, often more philanthropic, mindsets characterise the younger generation. Millennials who adhere to globally-oriented social values may have differing ideas as to how family wealth should be handled.

Regarding taxes, the study showed the huge difference that location can make when it comes to the tax implications of succession. The situation can also change depending on whether the succession happens via inheritance or retirement—read for more.

The fifth trend is also an interesting one, as generational attitudes could have unforeseen emotional impacts on a family. The differing expectations, hopes, and goals of each family member can certainly cause issues: for example, imagine an elderly CEO who grew up in much different circumstances to her daughter, who is poised to take over the company. The CEO wants to keep the family wealth close, and thus keeps control for longer than is wise, out of hesitation that her daughter will make investments that are too bold. Keeping an eye on these trends and taking a pragmatic approach to them could help prevent mistakes. Our team is specialised in such things— visit our webpage for more information.

For more insights, read the 2018 Global Family Business Tax Monitor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.